Abstract:

Extant literatures show that Nigeria firms have issue with determination of the perfect mix of debt and equity or whether to use equity or debt capital only to finance their investments and operations. The study explored the extent of relationship between profitability of the firms in Nigeria through the use of return on assets and return on investment ratios and capital structure decisions. This study used regression analysis to find the relationship that exists between capital structure and return on assets of the selected quoted firms in Nigreia form 2011 to 2015. It also find the relationship that exists between capital structure and return on assets of the selected quoted firms in Nigreia. This research limits its analysis to the use of data taken from the selected firms’ financial statement for the period under study. This finding shows that the relationship between to return on asset (ROA) and capital structure is insignificant but the relationship between return on equity (ROE) and capital structure is significant.